Corporate Restructuring

CORPORATE RESTRUCTURING
A PRESENTATION BY MR. S. H. BATHIYA
S. H. Bathiya & Associates - www.shbathiya.com
What is Restructuring?
Term Restructuring is not defined in Companies Act or Income tax Act. To alter the make up or pattern of. To alter the structure of something. There should be an existing structure before one can restructure. The existing structure may have many constraints-Financial, Legal, Business and Management constraints which must be kept in mind while restructuring.
S. H. Bathiya & Associates www.shbathiya.com 2
Bharti-MTN deal structure failed mainly due to legal constraints as dual listing is not permitted in India and South African Government -the 21% Shareholder of MTN- did not approve the deal in the structure presented. The deals contours involved a complex structure in which both companies would pay cash and equity for stakes in each other, the end result of which would have given Bharti Airtel a 49% stake in MTN and MTN and its shareholders would have obtained a 36% economic interest in Bharti. In the next leg, both companies would have considered a full-fledged merger. Dual listing would require a multi currency settlement structure and would lose SEBIs control over other country trading. It would also have required many changes in curent Indian FDI policy.
Corporate Restructuring
Corporate Restructuring is a Process of redesigning one or more aspects of a corporate for achieving certain objectives. There may be a single objective for Corporate Restructuring but most of the times there are multiple objectives of Corporate Restructuring . In all probability, there may be a dominant objective along with one or more other important objectives. Stated and unstated objectives. Grasims proposed merger of Cement Businesses achieves many other important objectives like strengthening Promoter Groups control over cement business, improving future cash flow position, etc. S. H. Bathiya & Associates www.shbathiya.com 4
GRASIM - PRE RESUTRCTURING GRASIM INDUSTRIES LIMITED

CEMENT
TEXTILES. etc
100%
55%
SAMRUDDHI
ULTRATRECH
1.
GRASIM - POST RESUTRCTURING GRASIM INDUSTRIES LIMITED

TEXTILES, etc
AROUND 65% SAMRUDDHI ULTRATECH CEMENT
SAMRUDDHI CEMENT
PROCESS OF CORPORATE RESTRUCTURING

1. Understand the objectives 2. Prepare viable options
S. H. Bathiya & Associates www.shbathiya.com
3. Select the right option by optimising
4. Execute the selected option.
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Understanding the Objectives of Corporate Restructuring.

1.
Positioning the business to be more competitive

By achieving Economies of Scale. By acquiring focus. By acquiring competition. By increasing efficiency By reducing expenses By acquiring larger market share or capacities By unlocking values
2. 3.
Surviving in an adverse economic climate. Taking the business in an entirely new direction.
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4.
Restructuring of Debt .
Corporate Debt Resrtuctuting Scheme of RBI Wockhardt Limited. Essar Limited. Arvind Limited.
5.
Rehabilitation of Business
Restructuring through BIFR-Zenith Limited, MJ Pharma, SM Dyechem Limited, Gujrat Lyka, Pradeep Drug Company. Buying or selling of stressed assets. ARCIL-Jaghadia Copper Limited, Global Boards Limited, Phlox Pharma Limited.
6. 7. 8. 9.
Inviting new partners or Private Equity. Settling Family Disputes or Family Arrangements Reliance Group Succession planning. Division of Assets among Promoters-Asian Hotels Limited-Trifurcation.
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RELIANCE DEMERGER
PROMOTERS PUBLIC PROMOTERS PUBLIC PROMO TERS/RIL PUBLIC
T T E
ENERGY
RIL
F G
CAPITAL
G
S. H. Bathiya & Associates - www.shbathiya.com 13
Scheme was not explicit about division between two brothers. Concept of Undertaking. Inter se transfer of shares between two brothers/families ? Takeover Code exemption.
14
10. 11.
Acquiring new Business or new Markets. Obtaining Listing.

By Reverse Merger-Jaipan Domestic, Tricom Agrochem Limited. By Normal merger. By Demerger.

12.
Getting shares Delisted.

Through Delisting Regulations. Through Buy back not possible.

13. 14. 15.
Improving the Balance Sheet , Profit and Loss Account or Cash flows. Consolidation of accounts. Saving on taxes. Section 72 A,
Tax considerations
Income-tax Dividend Distribution tax
Waiver of dividend LLP
Deemed Dividend tax Surcharge Wealth-tax Service tax Minimum Alternate Tax Carry forward of losses and depreciation. Marshal Sons Judgment-Supreme Court Supreme Court in the case of McDowell and Co. Ltd. v. CTO [1985] 154 ITR 148, Even if the transaction is genuine and even if it is actually acted upon, but if the transaction is entered into with the intention of tax avoidance, then the transaction would constitute a colourable device. That the courts are now concerned, not merely with the genuineness of a transaction, but with the intended effect of the transaction on the fiscal purpose. That, the true principle in the case of W.T. Ramsay [1981] 2 WLR 449 (HL) was that one must consider fiscal consequences of a preplanned series of transactions and one has not to dissect the scheme and consider individual stages separately.
MAT
Investment in
subsidiary
100% Subsi diary
Real estate Transfer at book values
17
16.
Creation/reduction of Reserves/Goodwill
Capital Reserve Extract from DQ Entertainment prospectus: March 8, 2010 : In respect of the Scheme of Amalgamation of the erstwhile DQ Entertainment Limited (Transferor Company) with our Company (Transferee Company), the accounting was not in strict compliance with AS 14. In case the accounting were in compliance with the purchase method specified in AS 14, amounts aggregating to Rs. 103.17 million would have been credited to Capital Reserve Account. General Reserve Revaluation Reserve Amalgamation Reserve Goodwill
17. 18. 19.
Providing Free movement of Cash Flows. Increasing Promoters shareholding/control. Increasing market capitalisation/improving perception
20. Write off Debtors, Debit Balance in P & L Account, Goodwill, Obsolete Stock Onward Technologies Limited Zenith Limited
19
ONWARD GROUP
PRE RESTRUCTURING
HOLDING COMPANY 100% SUBSIDIARY COMPANY
ONWARD TECHNOLOGIES LIMITED (OTL)-Listed Company SHARE PREMIUM : Rs. 36.66 Cr.
ASSETS INVESTMENT IN OEL :
Rs. 20.00 Cr.
ONWARD ESERVICES LIMITED (OEL) DR. BALANCE OF P/L : Rs. 15.68 Cr. IRRECOVERABLEDEBTORS:Rs.1.90 Cr. OBSOLETE INVENTORIES: Rs.1.81Cr. LOSS IN VALUE OF SUNDRY ADVANCES : Rs. 9.99 Cr. TOTAL Rs. 29.39 Cr. LIABILITIES SHARE CAPITAL : Rs. 20.00 Cr. LOAN FROM OTL : TOTAL Rs.10.69 Cr. Rs. 30.69 Cr.
20
LOAN TO OEL TOTAL
Rs. 10.69 Cr. RS. 30.69 Cr.
ONWARD GROUP
POST RESTRUCTURING
HOLDING COMPANY 100% SUBSIDIARY COMPANY
ONWARD TECHNOLOGIES LIMITED (OTL) SHARE PREMIUM : Rs. 7.26 Cr.
ONWARD ESERVICES LIMITED (OEL) DR BALANCE OF P/L : Rs.0 IRRECOVERABLE DEBTORS: Rs.0 OBSOLETE INVENTORIES: Rs.0 LOSS IN VALUE OF SUNDRY ADVANCES : Rs. 0 SHARE CAPITAL : LOAN FROM OTL : Rs. 1.29 Cr. Rs. 0
INVESTMENT in OEL LOAN TO OEL :
: Rs.1.29 Cr. Rs. 0 Cr.
21
Some issues for Onward

Whether section 269 SS of IT Act will apply if a loan is repaid otherwise than by way of an account payee cheque ? Whether the write off has to be/ should be routed through Profit and Loss Account in subsidiarys books or in holding companys books ? What is the position of true and fair ? Whether write off of debit balance in P and L account would jeopardize carried forward losses?
21. Write off of Deferred Revenue Expenditure against Share Premium

Section 100 of Companies Act. Telco Limited. A write-off of deferred revenue expenditure of Rs. 933 crores, a write-down of fixed assets of Rs. 215 crores and write-off for diminution in value of investments of Rs. 32 crores. This aggregate amount of Rs. 1,180 crores was written off against Telco's share premium account thereby reducing its reserves (and therefore its net worth). Mahindra and Mahindra Limited. Section 80 of Companies Act. Reduction of Capital Redemption reserve.
22.Write off of Intangibles

Alembic Limited. Marico Limited. Avoiding future write-offs against future profits. Improving Earnings per share and profitability ratios. MAT benefit-Auditors Qualification-Apollo Tyres Limited 255 ITR 273 (SC). The Assessing Officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to section 115J.
23. Reduction of Share Premium or Capital Reserve.

Section 80 of Companies Act Section 100 of Companies Act Creditors consent ?
25
24. Liquidation/Dissolution without winding up.

Section 46 of IT Act Dividend to the extent of distribution of accumulated profits Balance amount in excess of cost of acquisition of shares to be treated as capital gains.
26
25.
STEP UP UP
ACQUIRER COMPANY
AQUIAQUIRE SHARES WORTH RS. 200 CRORES SHARES WORTH RS. 200 CRORES SHAREHOLDERS
SHAREHOLDERS
LAND Rs. 1CRORE

Liquidation of step down subsidiary. Attachment of rights in step down subsidiary. Shree Nirmal Commercial Limited vs. CIT (193 ITR 694) Bombay High Court Hanuman Vitamin Foods Limited. The Supreme Court held that transfer of shares in a cooperative society is subject to levy of stamp duty under the Bombay Stamp Act, 1958. (AIR 2000 SC 2571) Reverse merger with step-down subsidiary. Actual Cost Section 43(1) of IT Act. Written Down Value-Section 43(6) of IT Act.
26. Capital Reorganisation

Squeezing out. Subdivision of shares. Change in kind of share capital. Variation of rights. Change in terms of issue of shares.
29
27. Issue of Preference bonus Shares/Bonus Debentures

Hindustan Lever Limited Sun Pharmaceuticals Industries Limited. Deemed Dividend provisions. Section 2(22) of IT Act. Taxation in the hands of shareholders. In case of redemption-in case of Buybackin case of sale. Taxation in the hands of Company
28. Stamp Duty Considerations

Transferee Listed Company Transferor Listed Company
Transfers Undertaking at Book values to 100% SubsidiaryPurchase consideration remains a liability
100% subsidiary invests in Demerged entity
Pays off the purchase consideration liability
Either through Asset Sales or through Slump Sale or Slump sale through Court Process
31
Cross holdings reduce stamp duty. First convert into 100% subsidiary and then merge. Article 25(da) of Bombay Stamp Act.10% of value of shares issued but not exceeding
5% of value of immovable property situated in Maharashtra .7% of value of shares issued plus consideration paid
whichever is higher. Remission of stamp duty would be available in the case of transfers envisaged under notification dated January 16, 1937, i.e., cases where at least 90 per cent. of the issued capital of the transferee company is in the beneficial ownership of the transferor company, where the transfer takes place between a parent company and a subsidiary, one of which is the beneficial owner of not less than 90 per cent. of the issued share capital of the other, or between two subsidiaries in each of which not less than 90 per cent. of the share capital is in the beneficial ownership of a common parent company.(Gemini Silk Limited-Calcutta High Court August 8, 2002)
29. Reduction of Entities

Strike off of name from the Register of Companies. Dissolution without winding up. Mergers or absorptions.
33
30. Shifting to more favorable locationlocation -Tax free Zones

What happens to benefits available to an Undertaking ? Amalgamation or demerger of an Infrastructure Undertaking of Section 80 (IA) of IT Act.-Section 80 IA (12A). Whether Section 80 IA (12A) will apply to 80 IB Undertakings or 80 IC Undertakings ?
34
CORPORATE RESTRUCTURING WITHOUT EXTERNAL HELP/APPROVALS . CORPORATE RESTRUCTURING WITH COURT / AUTHORITIES HELP
35
TOOLS /OPTIONS OF CORPORATE RESTRUCTURING
36
Compromises, Arrangements and Reconstructions Chapter V of Companies Act.

Section 391 to 394 of Companies Act. Code by itself. Approval of Court/NCLT Report of Liquidator and Reginal Director Required majority. Section 395 of Companies Act. Companies (Court) Rules, 1959.
Amalgamations- very popular tool Defined under Income tax Act. Condition of Industrial UndertakingAmalgamations are tax neutral in the hands of transferor company and in the hands of the shareholders carry forward and set-off of unabsorbed losses and depreciation to the transferee company.
Conditions prohibiting reconstruction or amalgamation of company

Section 376 of Companies Act. Where any provision in the memorandum or articles of a company, or in any resolution passed in general meeting by, or by the Board of Directors of the company, or in an agreement between the company and any other person, whether made before or after the commencement of this Act, prohibits the reconstruction of the company or its amalgamation with any body corporate or bodies corporate, either absolutely or except on the condition that the managing director or manager of the company is appointed or reappointed as managing director or manager of the reconstructed company or of the body resulting from amalgamation, as the case may be, shall become void with effect from the commencement of this Act, or be void, as the case may be.
39
Reverse Mergers.
Popularly used term
when a profit making company merges with a loss making company or when an unlisted company merges with a listed company or When a large Company merges with a smaller company - ICICI Limiteds merger with ICICI Bank or When stamp duties or other transaction costs are high
Cross Border MergersMergersInvolve more than one country Companies Act partially recognizes it. Section 394- Transferor Company includes any body corporate whether a company within the meaning of this Act or not. Section 2(7) of Companies Act Body Corporate..includes a company incorporated outside India. Laws of both/all the countries must be adhered to. Dividend planning. Double Taxation Treaty provisions.
Demergers and Hiving Off

Meaning and DifferenceConcept first time defined in Income tax Act Section 2(19AA) Conditions apply There must be more than one undertaking. Undertaking Defined. Demerged Company (Section 2(19AA)) and Resulting Company (Section 2(41A) )defined. Conditions are more than in an amalgamationDemergers are tax neutral in the hands of the transferor company and in the hands of the shareholdersIndustrial Undertaking not required for carry forward and setoff of losses. No conditions of continuing the Undertaking. Taxable Demergers
42
Demerger of Firms. Firms.

No mention in literature but a working proposition. Tax liability on demerger- Capital gains ? Splitting the firms and converting one of them into Company and inviting private equity or IPO. Demeger of LLPs.
43
Takeover of a Company
SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. Clause 40 A and 40 B of Listing Agreement. Hostile takeovers. Indirect takeovers. GDRs. Preference Shares. Competitive Bids. Poison Pills Zandu International takeovers-HSR Provisions-Treaty Provisions-Thin Cap RulesFame Adlab Section 79 to be kept in mind for takeover of an unlisted company.
Corporatisation
Many ways for Conversion of a partnership firm into a Limited Company Under Part IX of Companies Act, 1956. No capital gains tax liability - No stamp duty Succession of a firm by a Company (as a result of which there is a Transfer of Capital asset or intangible asset by a firm to a company)--Under Section 47(xiii) of Income Tax Act, 1961-Conditions apply
Admission of a Company as a partner and retirement of other partners from firm. Section 45 (4) of IT Act appliesDistribution of capital asset on dissolution or otherwise.
46
Succession of Proprietary Concern by a Limited Company- Section 47(xiv) of Income Tax Act, 1961. Conditions apply
47
Slump Sale of Undertaking

Section 50 B of IT Act.-Section 2 (42C) defines Slump Sale means transfer of one or more undertaking as a result of sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sales. Explanation 1 to Section 2 (19AA) of IT Act defines Undertaking. Long term gain or short term gain. Section 293 (1)(a) of Companies Act Postal Ballot requirement No VAT on Slump Sale. Stamp Duty payable as movable even if there are immovable properties in Undertaking-Anil Purshottamdas Kakad vs. Supdt. of Stamps Bombay High court Assignment Deed or Agreement to assign.
48
Pure asset sale or pure liability transfer.

Section 50 of IT Act Sale of Assets with Mortgage loans Sale and Lease back.
49
Variation of Rights.
Section 106 of Companies Act. Alteration of rights of holders of special classes of shares -where share capital is divided into different classes of shares.special resolution of holders of the issued shares of that classSEBI diktat for listed companies.
50
Conversion of a Fixed asset into Stock in trade and vice vice-a-versa

section 45(3) of IT Act. Section 2(47) of IT Act-Transfer-If the plans are put for approval of authorities.. Section 281 of Income tax Act does not apply to stock in trade. Section 293 of Companies Act does not apply to stock in trade.
51
SubsidiarisationSubsidiarisation Acquisition of 50+% shares. Acquisition of 100% shares. Issue of fresh shares. Buyback of shares. Through Court process. Demerger to a wholly owned subsidiary Slump sale to a subsidiary. Subsidiary by controlling the composition of Board of Directors of a Company. Subsidiarys shareholding in Holding Company prior to becoming subsidiary Company-Section 42 of Companies Act. Transfer to/from 100% Subsidiary. Section 47 of IT Act
52
Transfer to a wholly owned Subsidiary-not regarded as a transfer under section 47(iv) subject to conditions of 8 years relationship, etc. under section 47 A of IT Act. Transfer to a partly owned subsidiary
53
DesubsidiarisationDesubsidiarisation The process of breaking holding subsidiary relationship. Desubsidiarisation through IPO/offer for sale. By issue of fresh shares by subsidiary to others. By sale of shares. Section 47A of IT Act.
Trust Structure
Petroleum Trust.-Rs.3188 cr. sales price of Reliance SharesICICI also had a trust structure.
55
IPO/OFFER FOR SALE/FOREIGN LISTING
56
Differential Voting rights

Section 86 of Companies Act allows DVR in Equity Shares as per Rules Founder shares. Special rights. Participation in profits. Appointment of nominee directors Control. Section 255 of Companies Act Sebi directive DCA Rules
ESOPS and Sweat Equity

section 79A of Companies Act allows Sweat equity. Only directors and employees are entitled- for know how, IPR or value additions Tax aspects Accounting aspects
58
Subdivision and split of shares.

Section 13 (4) of Companies Act- In the case of a company having a share capital (a) unless the company is an unlimited company, the memorandum shall also state the amount of share capital with which the company is to be registered and the division thereof into shares of a fixed amount;
Buyback of shares
Section 77A of Companies Act allows. Sterlite Industries Limiteds case. Maxwell Industries Limiteds case.
60
Liquidation of Companies
Twin Star Holding Limited. Actual cost as a deduction ? Section 43 (1) ? Section 49 (1)(iii)(c) of IT Act-on any distribution of assets on the liquidation of a company-- Cost with reference to certain modes of acquisition- Cost to the previous owner is cost to the assessee
61
Pyramids and Triangles
62
Share of profits from a partnership firm/LLP

Section 10(2A) of IT Act. Section 115 JB of IT Act
63
FORMATION OF SPECIAL BOARDS

Family Board-Godrej Board of Advisors
64
Combination of many methods.
65
NEW POSSIBILITIES with LLP STRUCTURE
66
CONVERSION OF A COMPANY INTO LLP

LLP is treated as a firm for the purpose of Income tax Act. Definition of firm , Partner and partnership in section 2 (23) of IT Act amended LLP Act provides for such a conversion NO MAT is Payable by LLP- section 115JB uses words assessee being a company NO Dividend Distribution Tax is Payable by LLP section 115 - O uses words in respect of total income of a domestic company No surcharge No deemed dividend treatment
Section 73 Explanation not applicable to LLP - The Explanation applies to a company. Share of Profit from a firm is exempt from MAT under section 115JB of IT Act, as income under Section 10. Stamp Duty liability on conversion ?
68
Conversion from unlisted public company into limited liability partnership Section 57 of LLP ActAn unlisted public company may convert into a limited liability partnership in accordance with the provisions of this Chapter and the Fourth Schedule. There should be no charge on assets.
69
CAPITAL GAIN TAX on conversion into LLP ?

Finance bill 2010 has introduced Section 47 (xiiib). Applicable to small companies. Whether there is a transfer ? Texspin judgment Bombay High Court. 14A disallowance?
70
CONVERSION OF a FIRM IN TO A LLP

LLP Act provides for this Up gradation move Tax consequences ?
71
DOCUMENTATION- DRAFTING AND EXECUTION. Scheme of Arrangement Court Petitions Court Applications Affidavits MOUs Share Purchase or Share Subscription Agreement Shareholder Agreement Non Compete Confidentiality Agreements Non solicit Agreements Family arrangements Resolutions of Board and shareholders.
72
LEGAL PROVISIONS AFFECTING RESTRUCTURING

COMPANIES ACT SECTION 391 TO 394, SECTION 100 and many other sections Unlisted Companies (Issue of Sweat Equity Shares) Rules, 2003. Unlisted Public Companies (Preferential Allotment) Rules, 2003, Companies (Court) Rules, 1959.
73
Provisions relating to mergers and amalgamations in Companies Bill, 2009.

Scope of mergers and amalgamations has been enlarged to include: 1.Compromises or arrangements with creditors and members including take-over offers and the scheme of debt restructuring together with valuation of shares and other properties; 2. Mergers and amalgamation of companies including merger by absorption or merger by formation of new company; 3. Cross-border amalgamations; 4. NCLT is the single forum for approvals
74
SEBI Act, Rules and Regulations

Securities Exchange Board of India Act, 1992. SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997. SEBI (Issue of Capital and Disclosure Requirements ) Regulations, 2009. SEBI (Prohibition of Insider Trading) Regulations, 1992. SEBI (Buy- Back of Securities) Regulations, 1998. SEBI (Delisting of Securities) Guidelines, 2003. SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. SEBI (Informal Guidance) Scheme, 2003. SEBI (Issue of Sweat Equity) Regulations, 2002. SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.
Securities Contracts (Regulation) Act and Rules

Securities Contracts (Regulation) Rules
76
Stock exchange Listing Regulations

Provisions of Listing Agreement Clause 24(f). Clause 24 (g). Clause 40A and 40B. Listing Guidelines.
77
Sick Industrial Companies (Special Provisions) Act.

SICA overrides most of the legislations. BIFR has exhaustive powers.
78
Income Tax Act

Section 2(1B) Amalgamation, Section 2 (19A), 2 (19AA),2(42C) Section 28, 43, 45. 46, 49, Section 47-Transactions not regarded as transfer Section 50 Section 50 B- Slump Sale Section 50 C Section 72A Section 79
Indian Stamp Act and State Stamp Acts

state matter-Each state has different raates of stamp duty Union Terrritories Bombay High Court in Litaka Pharmaceuticals case-Conveyancedemerger also covered. Article of Schedule to Bombay Stamp Act When properties of a transferor Company are situated in 2 states
Sales Tax Laws

State VAT Act Central Sales tax Act Automatic Registration not possible. Maharashtra Vat Act has a unique provision.
81
Sale of Goods Act

Applies to movables Transfer of Property Act Court order is a conveyance. Consent decree is a conveyance
82
Competition Act, 2002

Applies to large mergers and takeovers
83
Labour laws
84
Rent Act
Automatic transfer of Tenancy not possible. THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSESTS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002(SARFESI)
85
FEMA/RBI/FDI Regulations
Sector specific restriction Take over of Gujarat Ambuja Cements by a foreign entity increase foreign stake in ING Vysya an insurance Company. DUE DILIGENCE
86
Accounting Standard 14
Does not apply to demergers Pooling of interest method and Purchase method Changing method as per court order Disclosures
87
IFRS-Business Combination and IAS IFRS22 IFRS 3 Business Combination
88
VALUATION
During restructuring-of shares, businesses, intangibles- various methods- Supreme Court Methods of valuation-NAV at Market Values, Earnings multiple Valuation, Discounted Cash flow valuation, Stock market valuation. Fairness opinion
89
Some issues
Whether authorsied capital will merge or demerge in case of a merger or demerger ? Whether the Transferee Company should be in existence on the Appointed date of Demerger ? Whether the Company need to wait for Stock Exchange approval prior to filing petition with the Court ? Whether separate Resolution under Section 100 of Companies Act required when the Scheme is under Section 391 to 394 ? Whether licenses will automatically be transferred in a Scheme of amalgamation ? Whether employees have right to present before Court ?
91

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CORPORATE RESTRUCTURING

A PRESENTATION BY MR. S. H. BATHIYA

S. H. Bathiya & Associates - www.shbathiya.com

S. H. Bathiya & Associates - www.shbathiya.com

GRASIM - PRE RESUTRCTURING GRASIM INDUSTRIES LIMITED

S. H. Bathiya & Associates - www.shbathiya.com

GRASIM - POST RESUTRCTURING GRASIM INDUSTRIES LIMITED

AROUND 65% SAMRUDDHI ULTRATECH CEMENT

S. H. Bathiya & Associates - www.shbathiya.com

S. H. Bathiya & Associates - www.shbathiya.com

S. H. Bathiya & Associates - www.shbathiya.com

PROCESS OF CORPORATE RESTRUCTURING

S. H. Bathiya & Associates www.shbathiya.com

3. Select the right option by optimising

4. Execute the selected option.

S. H. Bathiya & Associates - www.shbathiya.com

Understanding the Objectives of Corporate Restructuring.

Positioning the business to be more competitive

S. H. Bathiya & Associates - www.shbathiya.com

Acquiring new Business or new Markets. Obtaining Listing.

Getting shares Delisted.

100% Subsi diary

Real estate Transfer at book values

S. H. Bathiya & Associates www.shbathiya.com

17. 18. 19.

S. H. Bathiya & Associates www.shbathiya.com

ASSETS INVESTMENT IN OEL :

Rs. 20.00 Cr.

LOAN TO OEL TOTAL

Rs. 10.69 Cr. RS. 30.69 Cr.

S. H. Bathiya & Associates - www.shbathiya.com

ONWARD TECHNOLOGIES LIMITED (OTL) SHARE PREMIUM : Rs. 7.26 Cr.

INVESTMENT in OEL LOAN TO OEL :

: Rs.1.29 Cr. Rs. 0 Cr.

S. H. Bathiya & Associates - www.shbathiya.com

Some issues for Onward

21. Write off of Deferred Revenue Expenditure against Share Premium

22.Write off of Intangibles

23. Reduction of Share Premium or Capital Reserve.

S. H. Bathiya & Associates www.shbathiya.com

24. Liquidation/Dissolution without winding up.

S. H. Bathiya & Associates - www.shbathiya.com

LAND Rs. 1CRORE

26. Capital Reorganisation

S. H. Bathiya & Associates www.shbathiya.com

27. Issue of Preference bonus Shares/Bonus Debentures

28. Stamp Duty Considerations

100% subsidiary invests in Demerged entity

Pays off the purchase consideration liability

S. H. Bathiya & Associates - www.shbathiya.com

29. Reduction of Entities

S. H. Bathiya & Associates www.shbathiya.com

30. Shifting to more favorable locationlocation -Tax free Zones

S. H. Bathiya & Associates www.shbathiya.com

TOOLS /OPTIONS OF CORPORATE RESTRUCTURING

S. H. Bathiya & Associates www.shbathiya.com

Compromises, Arrangements and Reconstructions Chapter V of Companies Act.

Conditions prohibiting reconstruction or amalgamation of company

S. H. Bathiya & Associates - www.shbathiya.com

Demergers and Hiving Off

S. H. Bathiya & Associates www.shbathiya.com

Demerger of Firms. Firms.

S. H. Bathiya & Associates www.shbathiya.com

S. H. Bathiya & Associates www.shbathiya.com